Italy Focuses on New Car Incentive Plan to Boost Sales

Facing its 5th annual decline, Italy focuses on a new car incentive plan which will boost sales in the auto market and stimulate the struggling economy.

There are several factors that contributed to the fall of the auto market: tight credit conditions, weak economy, fewer new models from local carmaker Fiat, the highest petrol prices in Europe, and a crackdown on tax evasion issued by the Monti government.

“The government is working with representatives of Italy’s most important industries to see if there can be useful measures to boost growth,” said an Industry Minister source.

Data offered by industry trade groups shows that the car sector accounts for 11.6% of the country’s GDP and 16.6% of tax revenues. Car producers’ association Anfia said that because the boost in GDP related to the scheme will boost fiscal revenues, a car incentive scheme will not cost anything.

“Car industry associations hope something will happen,” a source close to the matter says. “The ministry looks very focused, but it hasn’t made a final decision yet.”

Currently around 30% of Italy’s 2,250 auto dealerships risk to be closed by the end of 2012. This will be a severe situation taking into consideration that auto dealerships account for about 40% of Italy’s automotive sector jobs.